Charlotte Newton, Chief Innovation Officer for a Global Client Account 7th March 2011
Better Demand Management: An Integrated Approach
© 2011 IBM Corporation
Better Demand Management – An Integrated Approach
About Charlotte Newton
20 years in Glaxo/GlaxoWellcome, final role as Head of Corporate IT 10 years in IBM Certified IT Strategy & Change consultant. Specialised in integrated services management and technology enabled innovation, across industry sectors Currently Chief Innovation Officer in a large IBM outsource client team, leading a joint innovation partnership to bring IBM capability to drive mutual value
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© 2011 IBM Corporation
Better Demand Management – An Integrated Approach
Objective for this session
Consider why IT Demand Management is a challenge for many organizations Outline an approach to improve discipline and efficiency in the definition of demand and the planning of supply, with particular emphasis on forecasting.
Topics covered include: the context for Demand Management upstream enterprise activities and their impact on downstream service response managing forecast uncertainties enabling effective Demand Management across multiple suppliers and the value of an integrated approach.
Source: If applicable, describe source origin 3
© 2011 IBM Corporation
Better Demand Management – An Integrated Approach
Agenda
Why is IT Demand Management a challenge? Role of forecasting Enabling effective Demand Management Value of an integrated Demand Management approach
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© 2011 IBM Corporation
Better Demand Management – An Integrated Approach
The value potential of better managed demand has long been known SUPPLY DRIVEN DEMAND DRIVEN
35-41%
8-10% 14-17% 20-22% 8-10% Renegotiate outsourced contracts
Leverage technology, factor costs, & scale
Reduce complexity thru standardization
Best practices transfer
Manage demand thru pricing, fit-for-demand drives affordability tradeoffs
Source: Booz Allen Hamilton, Hamilton 2004 5
© 2011 IBM Corporation
Better Demand Management – An Integrated Approach
Demand Management is being given greater priority across industry Priority given to Demand Management process to date: 21st of 25 0 Knowledge Management Service Portfolio Management Financial Management Information Security Management IT Service Continuity Management Service Catalogue Management Strategy Generation Service Level Management Service Reporting Service Asset and Configuration Mgmt Change Management Service Measurement Release and Deployment Management Supplier Management Incident Management Problem Management Availability Management Event Management Request Fulfilment Access Management Demand Management Capacity Management Service Validation and Testing Evaluation Transition Planning and Support
10
20
30 25 25
20 19 18 18 17 16 16 15 14 14 14 14 13 13 13 13 13 12 12 10 10 9 8
0 Demand Management Service Portfolio Management Capacity Management Availability Management Transition Planning and Support Strategy Generation Knowledge Management Release and Deployment Management Evaluation Supplier Management Service Asset and Configuration Mgmt Service Catalogue Management Service Validation and Testing Event Management Request Fulfilment Access Management IT Service Continuity Management Problem Management Financial Management Service Measurement Service Level Management Service Reporting Change Management Information Security Management Incident Management
10
20
30
40 37 35
30 30 29 29 28 27 27 26 25 25 24 23 22 22 22 21 20 19 19 18 18 16 13
Priority given to Demand Management going forward: 1st of 25
Respo nse Resp onse Perce Business nt Count sector Electronics & IT 42 27.1% Services, Professional 41 26.5% Service Banking 11 7.1% Education 7 4.5% Financial 7 4.5% markets Industrial 7 4.5% products Central 5 3.2% government Insurance 5 3.2% Telecom 5 3.2% Transportation 5 3.2% Automotive 4 2.6% Petroleum 4 2.6% Local 3 1.9% government Media & 3 1.9% entertainment Retail 2 1.3% Chemical 1 0.6% Health 1 0.6% Utilities 1 0.6% Wholesale 1 0.6%
Total
155
Source: itSMF Asian Survey 2008 6
© 2011 IBM Corporation
Better Demand Management – An Integrated Approach
What do we mean by Demand Management?
Focus Activity Demand
Information Capture Process
Supply
Planning Method
The process of capturing and prioritizing the demand for IT services to deliver business value and maximize strategic alignment and resource utilization AMR 2004
“A planning methodology used to manage forecasted demand” Wikipedia 2011 Demand & Supply
Alignment
Demand & Supply
Understanding and Influencing
“…encouraging and ultimately institutionalizing a better alignment between the supply and demand for internal services” Booz Allen Hamilton 2003
“…understand and influence customer demand for services and the provision of capacity to meet these demands ITIL V3, 2007 7
© 2011 IBM Corporation
Better Demand Management – An Integrated Approach
Demand Management requires an end to end approach that influences and aligns customer and supplier domains CUSTOMER DOMAIN: DEMAND Business Change & Priorities
E2E DEMAND MANAGEMENT Applications Portfolio Management Project Portfolio Management
Legacy Management
Project Execution
Change Management
Operations
Infra. Life Cycle Management Technical Architecture, Standards & Strategy With apologies to ITIL 8
SUPPLIER DOMAIN: SUPPLY © 2011 IBM Corporation
Better Demand Management – An Integrated Approach
There are differences of opinion about the what, who and how of Demand Management DEMAND
Two languages: Two perspectives: Misaligned expectations: I call the tune: It’s not my problem:
business & project
supplier & service
the value the customer wants
the profit the supplier makes
the terms of the SLA
the SLA baselines
the business drives the solution
TCO drives the solution
it’s something the supplier addresses
it’s something the customer addresses
SUPPLY These differences are accentuated when customer and supplier are in separate companies 9
© 2011 IBM Corporation
Better Demand Management – An Integrated Approach
Also, budgets are not aligned around what the customer wants and what they supplier can do DEMAND Business Change & Priorities £$€ Discretionary Budget ~25% Value Add
What the customer wants to do is not always easy for the supplier to accommodate
Fixed Budget £$€ ~75% Run Technical Architecture, Standards & Strategy SUPPLY
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© 2011 IBM Corporation
Better Demand Management – An Integrated Approach
Agenda
Why is IT Demand Management a challenge?
Role of forecasting Enabling effective Demand Management Value of an integrated Demand Management approach
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© 2011 IBM Corporation
Better Demand Management – An Integrated Approach
Tensions at the interface between demand and supply can be alleviated by forecasting DEMAND DOMAIN It’s all about
FO
RECASTING
SUPPLY DOMAIN
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© 2011 IBM Corporation
Better Demand Management – An Integrated Approach
Forecasting gives suppliers valuable information about service requirements, needed for effective service preparation DEMAND Physical requirement forecasts enable resource and other capacity planning for changes to be deployed •Server OS •Physical or virtual •SAN •DB etc.
Project Execution
Change Management
Operations
Non-functional requirement forecasts enable planning of the right level of operational service •Number and location of end users •Business criticality •Data retention •Security •Etc.
SUPPLY 13
This type of information is gathered early but often communicated to suppliers late in the project life cycle © 2011 IBM Corporation
Better Demand Management – An Integrated Approach
Here is a customer example of the effect of poor project execution, which included lack of any form of forecasting IN
…Impact of poorly executed projects
No configuration data Criticality not known Poor solution architecture Acceptance criteria not clear
Bold text shows items that could have been avoided by forecasting
Service Delivery can’t assimilate requirements in time Lack knowledge of what is important Capacity is not available when needed
Unforeseen incidents Standard remedies can’t be applied Inappropriate response by service providers No root cause analysis Customer dissatisfaction Increased cost of operation Need for remediation projects
E2E IT Supply Chain, Client Project Execution Study 2010 14
OUT
…More urgent projects © 2011 IBM Corporation
Better Demand Management – An Integrated Approach
Forecasting enables resources to be prioritised in line with business needs
•AD HOC OPERATIONAL CHANGE
Change Management
Catalogue Orders
PRIORITISATION OF REQUIREMENTS
However, forecasting is often weak or missing, which keeps suppliers constantly on the back foot 15
Capacity Management
•PLANNED OPERATIONAL CHANGE
Demand Forecasting
•PROJECTS
Request for Service
•CONTRACTS •PROCESSES •DEPLOYMENT RESOURCES
DETERMINANTS OF SUPPLY
SOURCES OF DEMAND
DEMAND
PRIORITISATION OF RESOURCES
SUPPLY
© 2011 IBM Corporation
Better Demand Management – An Integrated Approach
Forecasting starts with upstream processes which are a source of long, mid, and short term information about demand Long Term Forecasting
provides information to help shape the technologies and services required
DEMAND
Apps. Architecture & Policy Management Strategy & Direction
Order History
Applications Portfolio Management Legacy Management
Infra. Life Cycle Management Infra. Architecture & Policy Management
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provides ‘macro’ estimates used for e.g. quarterly Mid Term Forecasting projections PRIORITISATION
Planning & Budgeting
Project Portfolio Management
Project Execution
Short Term Forecasting
provides specific forecasts enabling alignment between lead times and project dates
SUPPLY © 2011 IBM Corporation
Better Demand Management – An Integrated Approach
Demand Management is more than just forecasting
DEMAND It’s all about
FO
RECASTING
and it’s a two way conversation which reinforces adherence to cost effective architectures and corporate standards E.G. Short term forecast discussions cover • technical standards adherence •TCO considerations •and general technical guidance
SUPPLY Demand Management is the processes, roles and tools that enable efficient dialogue between disparate organizations 17
© 2011 IBM Corporation
Better Demand Management – An Integrated Approach
Agenda
Why is IT Demand Management a challenge? Role of forecasting
Enabling effective Demand Management Value of an integrated Demand Management approach
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© 2011 IBM Corporation
Better Demand Management – An Integrated Approach
In a perfect world we would do all of these things…
Understand business priorities and requirements Define business model changes
Understand Value (Demand)
Understand business affordability Design fit-for-demand solutions
Understand Cost to Serve (Supply
Optimize Supply and Demand
Engineer the Delivery Model Confirm leadership Commit resources Execute
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Understand cost drivers Define performance improvement levers
Align strategy, process, organisation Embed enabling systems and technology Define metrics
Manage the Change
© 2011 IBM Corporation
Better Demand Management – An Integrated Approach
Here are some real world recommendations to start effective Demand Management
1. Define a clear process - break down the end to end process into clear short, mid and long term steps, and define a clear process for each 2. Recognise it’s not a one to one situation – multiple suppliers requires an integrated approach 3. Leverage current standards - link short term (project) forecast points to the toll gates in your project methodology lifecycle 4. Take a phased approach – initial deployment to test the fit and understand the value, then global adoption
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© 2011 IBM Corporation
Better Demand Management – An Integrated Approach
Define a clear process
Here’s the outline of a SIMPLE process covering short term forecasting developed with a client Trigger – Business Request
Register Demand
Develop Business & Technical Content
Consolidate Demand
Review & Confirm Supply
Monitor Forecast Trends
Areas to look out for – Mismatch between demand volume and the available channels for demand forecasting within the suppliers – Frequency of forecast reviews, manage by exception – Perceived effort - re-distribution of, rather than addition of, resources – Dealing with fuzzy projections of demand – keep a history to when a forecast is likely to become order – Supplier can fix it – keep the focus on upstream activities and not just downstream (supplier) processes 21
© 2011 IBM Corporation
Better Demand Management – An Integrated Approach
Recognise it’s not a one to one situation – multiple suppliers require an integrated approach DEMAND FOCUS
CHARTER Problem Statement:
Roles and Responsibilities:
GPS is essential to maintain base business, it is used for every drug project
Business Area:
GPS II system is reaching its current limits and the old infrastructure hardware components cannot be scaled up anymore to meet the expected business growth
GPS II suffers poor performance, as the current architecture leads to a resource cannibalization of the basis system ClearCase and the application SAS
Kathleen Mellars Kathleen Mellars
Account Manager:
Wanda Bidlack
Business Lead:
Roy Ward
Dependencies / Linkages
Project Scope: Replace current GPS II server environment and extend software licensing with newest versions Implement Disaster Recovery/back up services standard for a system classified as vital
•
MODESIM: environment to run modelling & simulation jobs requires access to data within GPS II system.
•
C-DARS: Requires SAS 9, new GPS II test and productive environment and selected clinical projects migrated to new environment to accomplish project goals.
Migrate all data from existing to new environment with minimal impact on active drug projects.
Key risks / Critical success factors
Proposed Solution:
•
Install new, parallel GPS II environment (development, test and production) in CH (Basle) having Disaster Recovery/back up services implemented. Users will access a single site solution via CITRIX, ClearCase local client package will be removed.
CSF: Minimize disruption to the business during migration process
•
CSF: Performance improvement
•
Have current access limitation and problems with CITRIX metaframe licenses resolved
•
Install SAS version 9.2 and ClearCase version 7
Dedicated Servers Manage Systems
Financial Assumptions: Total project costs are shown here. Note: the CAR only reflects planning and execution costs.
improvements lead to 99.3% system availability. Full system recovery in 1day in case of disaster.
Draft Charter Approved
19-Dec-07
Planning Charter Approved
23-Apr-08
Execution Charter Approved
02-Sep-08
New GPS II Environment available
08-Dec-08
Project Completion
26-Jun-09
FINANCIALS
No delays to critical or heavy weight projects during migration.
Project carries infrastructure installation and Expense Capital $3'139 $592
2008 2009 2010 2011 2012 Total
Value Generated
Trigger – Business Request
operation costs for 4 months in 2008 and 5 months in 2009
SAS license costs are considered to cover only additional costs caused by the project Project approach meeting date: 20-Aug-2008
$3'731
$0
$0
WAN / LAN
Rack Spaces
Business Benefits: 10% annual growth in user population supported. System performance improves by 10-20%. Stability
Storage Devices
CSF: Resolve as prerequisite for GPS 2 upgrade go-live the 16 group limit to enable business work efficiently (M&S and CIS)
Migrate all data from old to new environment according to migration plan After all data have been migrated, retirement of old environment
PLAN
CUSTOMER SOURCES
CDMA, CIS
Business Sponsor: System Owner:
Provide Data Centre Requirements
Tollgate review color:
Register Demand
Develop Business & Technical Content
Consolidate Demand
Review & Confirm Supply
Monitor Forecast Trends
Service Providers Power consumption + Cooling + Network Ports Service Focus
PLAN 2008 Sep-08
Oct 08
2009 Nov-08
Dec 08
Jan-09
Feb-09
Mar 09
Apr-09
Dis aste r Recovery (DR) Te st
DR Implemented
May 09
Jun-09
Kickoff De tail Des ign & Deve lopm ent Communicate Final migration schedule
Migration Pre paration
SLA & GPS 2 Docume ntation (ITIC item res olution) Te st Script Deve lopm ent and Te st Planning Training Mate rial Deve lopm ent CR Approval P re pa re de c is io n & C R fo r
P e rf o rm a nc e a nd Lo a d T e s t pre pa ra t io n
ID T e s t Exe c ut io n
P ilo t M igra t io n
GPS 2 Validated Computerized System QM Readiness for Deployment Start Migration 1/ 4 N o nC rit ia l P ro je c t s
T e s t & Va lida t io n R e po rt
3 / 4 N o nC rit ia l P ro je c t s
Exe cute performance and load
C rit ia l P ro je c t s
Confirm Performance Measures
All projects migrated Sys tem Re tirem ent
Old GPS Environment Retired
Das hboard Im plem ented
Project Closed
P ro je c t C lo s e do wn, Le s s o ns Le a rne d, P o s t P ro je c t R e v ie w, C A R F o rm 6, C P S M o nt hly R e po rt ing & S t e e ring C o m mit t e e s
ARCHITECTURE
Customer and all Suppliers
Hostname
Assigned Datacenter
Task IDDC
Task Description
Power/Coo
Rack Space
[kVA]
FOR-CVPHCHBS-S4485
503 extension
44/104
PHCHBS-S4484
503 extension
44/104
PHCHBS-S4483
503 extension
Newtape libraries in existing DCs
SSC-987
986 44/104
903 PHCHBS-T3655
503 extension
44/123
PHCHBS-S4476
503 extension
44/123
PHCHBS-T3656
503 extension
44/123
899 898
1 WSJ-210 2 WSJ-210 3 WSJ-210 4 WSJ-210 5 WSJ-210
Installation of 1 new tape library 1 x 3.4 Copy data from 1 old tape library to 1 new tape li Installation of 1 new tape library 1 x 3.4 Remove 1 old tape library - 1 x 3.4 Installation of 1 new tape library 1 x 3.4
Provide Data Centre Facility Services DC 1
DC 2 Rack Spaces
….
Service Providers Power consumption + Cooling + Network Ports Service Focus
INTEGRATED CAPACITY MANAGEMENT
Joint Integrated DEMAND/SUPPLY Focus
SUPPLY FOCUS 22
© 2011 IBM Corporation
Better Demand Management – An Integrated Approach
Link short term (project) forecast points to tollgates in the project lifecycle
YOUR PROJECT METHODOLOGY PREPROJECT
FORECASTING POINTS
PHASE 1
0
General Demand
PHASE 3
PHASE 2
1 OOM*
2 Specific Demand
PHASE 4
3 Quantity
* Order of Magnitude
Leverage established methods and practices to gain maximum traction quickly Educate, educate, educate about the importance of early forecasts, even though the numbers may be vague it really helps suppliers – The forecast schedule is as important as a project definition report or architecture document Build forecasting into personal objectives (human performance management)
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© 2011 IBM Corporation
Better Demand Management – An Integrated Approach
Take a phased approach – client example, under discussion The initial deployment consists of three phases, providing phased deliverables over a nine month period W1
W17
W8
1. Configuration
”Lean“ the processs; configure the workflow & plan early adoption; design integration with service provider processes
2. Early Adoption
Phased early adoption within the pioneer Business Unit Learning Capture
Global Adoption
Roll out to other Business Units starting at week 18, “carrot shaped stick“ W39
3. Process Integration
Background activities in parallel to embed the process and incorporate improvements based on initial learning
Timing is indicative, to be confirmed 24
11/03/2011
© 2011 IBM Corporation
Better Demand Management – An Integrated Approach
Agenda
Why is IT Demand Management a challenge? Role of forecasting Enabling effective Demand Management
Value of an integrated Demand Management approach
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© 2011 IBM Corporation
Better Demand Management – An Integrated Approach
Integrated Demand Management addresses many demand / supply issues...
Inconsistent or missing business prioritisation, resulting in disconnect between business priority and how resulting in inefficient architecture, capacity and resources are allocated low conformance with standards Lack of forecasting of physical requirements from and/or low understanding of TCO enterprise to service providers, resulting in problems
Insufficient technical knowledge in the enterprise,
with capacity and resource planning Inadequately specified RFS / Catalog orders .Gap between the enterprise business view of requirements and including technical errors, supplier service view of requirements, resulting in misresulting in delays in the communication and inefficiencies in governance execution of the Service Request and Order Fulfilment processes, and low customer sat ratings
Lack of integrated coordination of supply across multiple service providers, resulting in serial lead times and discussion about dependencies too late in the demand life cycle
Failure to capture and communicate non-functional aspects of demand (how many users, business criticality, data retention, security requirements, archive, etc.) which are crucial to enable effective operational support once a service is live, and which may have an impact on service arrangements that need to be put in place. 26
© 2011 IBM Corporation
Better Demand Management – An Integrated Approach
Demand Management Benefits Case Study Mis-communications & inefficiencies in governance Situation 25 week project, required 20 servers to be configured by external resources No demand management Action Requirement for non-standard items communicated to retained IT External partner resources engaged in line with approved plan Technical guidance requested to support solution design Outcome No technical resource available for guidance Requirements not communicated to supplier until orders were placed Lead time delays advised to retained IT but not passed quickly to project team Data centre space not allocated even though project is priority Impact Significant slippage - 20% increase in project time Additional $140k cost incurred Greatly increased risk to project delivery With Availability dates for required technology known early: ¾ plan realistic dates Demand External resources engaged later to fit with lead times: ¾ avoid overspend Management Technical support available to assist solution design: ¾ identify non std reqs. Requirement for non-standard items flagged early: ¾ supplier is ready Pre-allocated data centre capacity: ¾ prioritise capacity 27
© 2011 IBM Corporation
Better Demand Management – An Integrated Approach
...and reduces the differences of opinion which inhibit smooth cooperation around demand and supply DEMAND
Two languages: Two perspectives: Misaligned expectations: I call the tune: It’s not my problem:
Talk the same business & project language
supplier & service
the value the customer Understand each the profit the supplier wants other’s perspective makes the terms of the SLA the SLA baselines Set expectations the business drives theclearly TCO drives the solution solution Balanced needs and objectives it’s something the it’s something the customer addresses supplier addresses Joint responsibility SUPPLY
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© 2011 IBM Corporation
Better Demand Management – An Integrated Approach
We model the value for clients based on their specific situation
BUSINESS FOCUS
These are the summary of key areas of value* from integrated, end to end Demand Management
IT FOCUS
Business Relevance
Architectural Fit Fit for Purpose Design
Financial Control
VALUE VALUE BENEFITS BENEFITS
End to End Transparency
Planning Effectiveness
*
KVIs KVIs
Customer Satisfaction
CAPABILITIES CAPABILITIES ENABLERS ENABLERS FEATURES FEATURES
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We use a simple value framework to define the desired outcomes and measurable value which are used to track the benefits delivered by the process once it has been deployed
© 2011 IBM Corporation
Better Demand Management – An Integrated Approach
Thank you
Charlotte Newton Chief Innovation Officer Client Integrated Account
[email protected] +44 7753 832967
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© 2011 IBM Corporation
